Unfair reduction in bonus

A policyholder found that the bonus on his maturing policy had been cut by 40% compared to the original projection issued on the point of sale. The reason given by the insurance company was that the bonus was cut due to several economic crisis during the past years. The policyholder argued that one company - who had gone through the same crises- did not cut the bonus, but his the insurer rejected his argument.

The policyholder asked my views on the fairness of the bonus cut and if there is any point in lodging a complaint with FIDREC.

I encourage him to lodge this complaint with FIDREC. A large part of the bonus cut is probably due to the cut in terminal bonus. This cut might have been necessary earlier during this year, when the stock market dropped sharply. However, the stock market had recovered by 60% (from its lowest point) during the past six months. It is only fair that the cut should be partially restored. I hope that FIDREC will consider this point in its adjudication.

Tan Kin Lian